UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to __________________
Commission file number 0-1055
FLORIDA PUBLIC UTILITIES COMPANY
(Exact name of registrant as specified in its charter)
Florida 59-0539080
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
401 South Dixie Highway, West Palm Beach, FL 33401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (407) 832-2461
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, par value $1.50 per share American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K(Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment of this Form 10-K.[X]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, computed by reference to the closing price on March 13, 1995,
was $27,183,881.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes_____ No_____
APPLICABLE ONLY TO CORPORATE REGISTRANTS
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. At March 13,
1995, there were 1,449,807 common shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Proxy statement for the Annual Meeting of Common Stockholders, April 18,
1995. (PartIII)
PART I
Item 1. Business
General
The Company was incorporated on April 29, 1925 under the 1925 Florida
Corporation Law and is continuing its corporate existence pursuant to such
law and its Certificate of Reincorporation, as amended. The Company is a
public utility regulated by the Florida Public Service Commission (except
for propane gas service)and provides natural and propane gas service,
electric service and water service to consumers in Florida. The Company
is comprised of the following four divisions and number of customers as of
December 31, 1994: (1) West Palm Beach, located in southeast Florida,
serves natural gas to 26,675 customers and propane gas to 5,598 customers;
(2) Mid-Florida, consisting of the Sanford and DeLand districts, serves
7,573 natural gas customers and 4,451 propane customers; (3) Marianna,
located in the Florida panhandle, provides electricity to 11,668
customers; (4) Fernandina Beach, located in extreme northeast Florida,
serves 11,483 electric customers and 5,388 water customers. The economies
of West Palm Beach, Sanford, and DeLand rely somewhat on the migration of
winter residents and tourists during the winter season. Agriculture
and citrus processing, together with light industry, provide year-round
stability. Marianna's economy is predominantly agricultural including
peanuts, soy beans, corn, pork and beef. The area has many small
industries. Fernandina's economy is centered around two large paper mills;
ITT Rayonier, Inc. and Container Corporation of America. The beach area,
Amelia Island, is noted for its fine beaches and resort amenities.
The population by counties, as estimated by the University of Florida's
Bureau of Economic and Business Research, in which the service areas are
located, as of April 1, 1994, is as follows:
West Palm Beach (Palm Beach County) 937,000
Sanford (Seminole County) 317,000
DeLand (Volusia County) 397,000
Marianna (Jackson, Calhoun & Liberty Counties) 64,000
Fernandina Beach (Nassau County) 47,000
In Fernandina Beach, two large paper mills accounted for 13.5% of total 1994
electric division operating revenues and 7.8% of the Company's total
operating revenues. However, such mills accounted for 6.9% of total 1994
electric division operating margin and 2.6% of the Company's total
operating margin.
Sources of Gas and Electricity
Natural Gas
The Company receives its total supply of natural gas at ten City Gate
Stations connected to Florida Gas Transmission Company's (FGT) pipeline
system. FGT is the only natural gas pipeline serving peninsular Florida
and is under the jurisdiction of the Federal Energy Regulatory Commission
(FERC). During 1994 the Company has been actively involved in FGT's Phase
III expansion and curtailment filings.
Florida Gas Transmission Company is currently constructing their Phase III
expansion. This expansion program will add 550 MMBTU per day of pipeline
capacity of FGT's current capacity of 925 MMBTU per day. The Company is
one of thirty-two contracting entities participating in FGT's Phase III
expansion.
This pipeline expansion program will provide adequate future pipeline
capacity through the FGT system to permit continued customer and load
growth into the next century. The current FGT Phase III expected
in-service date is March 1, 1995.
On April 8, 1992 the FERC issued Order 636. This Order required pipelines to
provide transportation services which are comparable in quality and levels of
services that pipeline customers receive when they purchase gas supplies
directly from the pipeline. FGT's filing to comply with Order 636 became
effective on November 1, 1993. As of that date, the Company no longer
purchases any gas supplies from FGT but rather uses FGT to transport 100%
of the Company's natural gas requirements. The Company had the
appropriate gas supply contracts in place of the effective date of the
Order and presently renegotiates such contracts annually.
Over the last four years the Company has gained vast experience directly
contracting for gas supplies with marketers and producers while
contracting for transportation services from FGT. This experience
appropriately postures the Company to be most effective in operating under
Order 636. The Company lowered its fuel cost substantially by directly
purchasing gas supplies from sources other than FGT. All fuel cost
savings are passed along to the Company's customers.
The Company has actively reduced demand charges it pays for the pipeline
capacity by "subletting" the Company's unused capacity for short terms to
other FGT customers. For the period of October 1991 through December 1993,
the Company had one of the lowest average gas prices of all the local
distribution companies regulated by the Florida Public Service Commission.
During 1994 the Company received approval on an Off-Systems Sale Tariff.
This tariff permits the Company to sell capacity packaged with gas
supplies to any customer receiving service directly and/or indirectly from
FGT. This tariff permits for profit sharing between Florida Public
Utilities Company and its customers. The Company will utilize every
future potential opportunity to keep its total cost of gas as low as
possible.
The Company is near completion of the installation of its Systems Control and
Data Acquisition system (SCADA) terminals at interruptible sales and
transportation customers' sites. This system effectively allows the
Company to closely monitor such customers in order to maximize sales and
avoid high pipeline penalties.
Electricity
The electricity sold in the Marianna Division is purchased from Gulf Power
Company under their Wholesale Contract Tariff as filed with the Federal
Energy Regulatory Commission. Agreements are signed for each of five
delivery points and are for a period of five years. These agreements may
be canceled after the five years by either party upon notification one
year prior to cancellation date.
In the Fernandina Beach Division the electricity sold is purchased under
contract from the Jacksonville Electric Authority (JEA). During 1992 the
Company renewed its contract with JEA for an initial period of three years
and shall continue in effect thereafter until either the Company or JEA
gives two years' notice of termination. In 1992 Container Corporation of
America (CCA) also supplied the Company with power generated by them in
excess of their needs. This contract is effective until either party
gives 90 days' notice of intention to terminate.
Water is extracted from Company-owned wells located within Fernandina Beach.
The following table sets forth the revenues, operating profit and
identifiable assets of each of the Company's business segments.
(See "Segment Information" in the Notes to Financial Statements.)
1994 1993 1992
(in thousands)
Revenues
Gas $24,814 $26,773 $29,498
Electric 36,070 38,307 36,174
Water 1,516 1,504 1,377
Operating profit
Gas 1,966 2,245 2,955
Electric 2,946 2,750 2,280
Water 378 352 292
Identifiable assets
Gas 34,854 34,275 33,046
Electric 31,189 30,512 29,452
Water 4,721 4,696 4,771
Regulation
The Florida Public Service Commission, pursuant to State Statutes, has
authority encompassing natural gas, electric and water rates, conditions
of service, the issuance of securities and certain other matters affecting
the operations of the Company.
Franchises
The Company holds franchises in each of the incorporated municipalities where
natural gas, electric and water operations take place. These franchises
generally have terms from 15 to 30 years and terminate at various dates.
Employees
On December 31, 1994 the Company had 302 employees, of whom approximately 119
were covered under union contracts with two labor unions, the International
Brotherhood of Electrical Workers and the International Chemical Workers
Union. The Company does not engage in research activities.
Competition
Generally, in municipalities and other areas where the Company provides
natural gas, electric and water services, no other utility directly
renders such service.
Item 2. Properties
The Company's properties consist primarily of distribution systems and
related facilities. At December 31, 1994 the Company owned 22 miles of
electric transmission lines and 976 miles of electric distribution lines.
The gas properties distribute gas through 960 miles of 3" equivalent gas
main. The water property consists of deep wells, pumping equipment, water
treatment facilities and a distribution system. The propane gas systems
operated by the Company's subsidiary have bulk storage facilities and tank
installations on the customers' premises.
Certain properties of the Company and the shares of Flo-Gas Corporation, a
wholly-owned subsidiary, are subject to a lien collateralizing the funded
indebtedness of the Company under its Mortgage Indenture.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters
The Company's common shares are traded on the American Stock Exchange
under the symbol FPU.
1994 1993
Low High Low High
STOCK PRICES
Quarter ended
March 31 $17.25 - $18.88 $19.50 - $21.75
June 30 16.88 - 18.13 19.88 - 21.63
September 30 17.00 - 18.13 20.00 - 22.00
December 31 15.75 - 17.25 18.63 - 21.50
DIVIDENDS PAID
January 1 $.28 $.27
April 1 .29 .28
July 1 .29 .28
October 1 .29 .28
At March 13, 1995, there were 1,042 holders of record of the Registrant's
Common Stock.
Item 6. SELECTED FINANCIAL DATA (in thousands, except per share data)
Years Ended December 31,
1994 1993 1992 1991 1990
Revenues $62,400 $66,584 $67,049 $62,887 $59,836
Operating margin 23,163 22,611 22,126 21,253 18,953
Net income 1,717 1,751 1,843 1,597 1,076
Earnings per common
share 1.18 1.22 1.47 1.43 .97
Dividends per common
share 1.16 1.12 1.08 1.00 1.00
Total assets 82,281 78,035 71,195 68,955 63,416
Utility plant-net 63,713 61,567 59,746 57,335 53,793
Current debt 4,673 4,028 737 12,051 8,050
Long-term debt 23,500 24,173 25,818 18,555 18,606
Common shareholders'
equity 22,334 21,961 21,483 15,151 14,414
Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition
RESULTS OF OPERATIONS
Overview The Company is organized into three business segments,
natural and propane gas, electric and water. The gas and electric
segments aggregate approximately 95% of total operating margin.
Contributing to variations in operating margins are the effects of
seasonal weather conditions, the timing of rate increases and the
migration of winter residents and tourists to central and southern
Florida during the winter season.
From the Florida Public Service Commission (FPSC) perspective, the
Company operates four distinct "entities", i.e., Marianna electric,
Fernandina Beach electric, Fernandina Beach water, and natural gas,
consisting of Palm Beach County, Sanford and DeLand. The Company has a
request for a rate increase pending with the FPSC for its natural gas
operations. Such request should be finalized in June. The previous
rate increase was effective February 1991. The Marianna electric
division received a rate increase which became effective February 1994.
The Fernandina Beach electric division received a rate increase which
became effective February 1989. The Company receives an increase each
year for its water operation through a price index mechanism provided by
the FPSC. The Company does not foresee a need to file for a rate
increase in any of its regulated operations until at least 1997. See
"Rate Matters" in the Notes to Financial Statements (Notes).
Summary of Operating Margins
(dollars in thousands)
1994 1993 1992
Natural and Propane Gas
Operating margin $13,142 $13,160 $13,357
Less propane 2,457 2,534 2,866
Less municipal interruptible 225 224 215
Remainder $10,460 $10,402 $10,276
Electric
Operating margin $8,573 $8,015 $7,455
Less industrial interruptible 596 582 466
Remainder $ 7,977 $ 7,433 $ 6,989
Operating Margin Operating margin, defined as gross operating revenues less
cost of fuel and taxes passed through to customers which are based on
revenues, provides a more meaningful basis for evaluating utility operations
since fuel costs and taxes passed through to customers have no effect on
results of operations.
Natural and Propane Gas Service Total natural and propane gas service
operating margin was virtually unchanged in 1994 as compared with 1993.
Excluding propane gas operating margin and the natural gas operating margin of
a large municipal interruptible customer from total gas operating margin,
remaining operating margin increased $58,000 or about one-half percent over
1993. Propane gas operating margin decreased $77,000, or 3%, due to an
approximate one-half percent decrease in customers and an approximate 7%
decrease in average consumption per customer. The decrease in consumption was
partially offset by an approximate 5% increase in the price of propane gas
sold.
Total natural and propane gas service operating margin decreased $197,000 or
1.5% in 1993 from 1992. Excluding propane gas operating margin and the
natural gas operating margin of a large municipal interruptible customer from
total gas operating margin, remaining operating margin increased $126,000 or
about 1% over 1992. Propane gas operating margin decreased $332,000, about
12%, due principally to a 2% decrease in customers, some of which were
converted to natural gas, and a 12% decrease in average consumption per
customer.
In 1994, operating profit (operating profit is defined as revenues less
operating expenses, including cost of fuel, and does not include other income,
interest income, interest expense and income taxes - see "Segment Information"
in the Notes)decreased $279,000 or $261,000 more than the decrease in
operating margin. Operating expenses have generally increased due to
inflationary pressures in all classifications of expense with payroll and
related costs and depreciation accounting for most of the increase. Such
increase is partially offset by a decrease in FPSC related administrative
expenses.
In 1993, operating profit decreased $710,000 or $513,000 more than the
decrease in operating margin. Operating expenses have generally increased due
to inflationary pressures in all classifications of expense with payroll and
related costs and insurance expense (an increase in the cost of health
benefits partially offset by a decrease in workers' compensation insurance)
accounting for most of the increase.
Electric Service In 1994, operating margin increased $558,000 or about 7% as
compared with 1993. Excluding two industrial interruptible customers,
operating margin increased $544,000 or approximately 7%. Other than the
industrial customers, the increase in operating margin is affected by a 2%
increase in customers, a 2% decrease in average consumption per customer and
an approximate 8% increase in the price of MWH sold. Such increase is due to
the permanent rate increase in the Marianna division that went into effect
January 1994.
Total electric service operating margin increased $560,000 or about 8% in 1993
as compared with 1992. Affecting the comparison of operating margins are two
industrial interruptible customers. Excluding these customers, operating
margin increased $444,000 or 6%. Other than the industrial customers, the
increase in operating margin is principally due to a 2% growth in customers
and a 4% increase in average consumption per customer.
In 1994, operating profit increased $196,000 over 1993 or $362,000 less than
the increase in operating margin. Operating expenses have generally
increased due to inflationary pressures in all classifications of expense.
The major reasons for the increase in expenses are the FPSC disallowance of
capitalizing overheads beginning in 1994, the establishment of a storm damage
reserve in the Marianna division beginning in 1994 and increased maintenance
and depreciation costs.
In 1993, operating profit increased $470,000 as compared with an increase of
$560,000 in operating margin. Improvement in workers' compensation insurance
claim experience was partially offset by an increase in the cost of health
benefits and general increases in all classifications of expense due to
inflationary pressures with higher depreciation and maintenance costs and
payroll and related costs accounting for most of the increase.
Interest Charges Interest charges consist of interest on bonds, short-term
borrowings and customer deposits. Interest amounts fluctuate depending on,
among other things, short-term rate changes and the timing of the sale of
bonds. In June 1992, the Company issued $8,000,000 of First Mortgage Bonds at
9.08% and paid down its line of credit which had an interest rate of 4.5% at
that time. See "Notes Payable" and "Capitalization, Financing Transactions"
in the Notes for additional information.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows Net cash provided by operating activities increased $4,615,000
during 1994, primarily due to insurance settlement proceeds of $3,185,000 and
over-recovery of fuel costs of $1,092,000. The principal reason for the
increase in accounts receivable and over-recovery of fuel costs is the
decrease in the fuel cost of natural gas.
Cash used in investing activities usually fluctuates within a narrow range as
construction expenditures are typically $5.5 to $6.0 million per year.
Cash provided by financing activities decreased $1,743,000 from 1993
principally because short-term borrowings and debt repayments substantially
offset in 1994 and in 1993 short-term borrowings exceeded debt repayments by
$1,646,000. While there was virtually no change in total cash flows from
financing activities in 1993 as compared with 1992, there were in 1992, two
transactions that, when offset, resulted in minimal impact on the financing
cash flows of the Company. In June, the Company completed an $8,000,000
private placement of First Mortgage Bonds, 9.08% series due 2022, and in July
completed the sale of its common stock offering of 287,500 shares at $20.875
per share. The net proceeds, before deduction of expenses of approximately
$69,000, were $5,642,000.
Deferred Income Taxes The increase in deferred income taxes and regulatory
asset in the accompanying balance sheet results principally from the income
taxes paid on the environmental insurance proceeds. Accordingly, the same
amount is reflected as cash used by operating activities in the accompanying
1994 statement of cash flows in the caption deferred income taxes. Such taxes
will turn around as amounts are expended for environmental purposes.
Capital Resources The Company has historically replaced short-term borrowings
when the outstanding amount was large enough to make a sale of bonds
economically feasible and when long-term interest rates appear attractive.
In 1994, the Company replaced its $10,000,000 line of credit with a
$15,000,000 line of credit maturing in 1997. The line provides for interest
at London Interbank Offered Rates (LIBOR) plus 50 basis points. At December
31, 1994 there was a balance of $4,000,000 outstanding. The Company estimates
that borrowings under such line during 1995 will be $2,000,000 to $3,000,000,
resulting in a balance outstanding at December 31, 1995 of $6,000,000 to
$7,000,000.
The Company has no material commitments for construction expenditures. Such
expenditures, excluding the purchase of the propane system on December 30,
1991, have averaged $5.7 million over the past five years. Capital
expenditures for 1995 have been budgeted for $7,227,000; however, while the
actual amount expended for construction is influenced by many factors, the
Company anticipates that expenditures for 1995 will not be significantly
different from those amounts historically incurred. For additional
information see "Notes Payable" and "Capitalization" in the Notes.
The Company anticipates that its future capital expenditures and commitments
are likely to require additional debt and/or equity financing.
Issuance of Additional Bonds The Company's 1942 Indenture of Mortgage and
Deed of Trust, which is a mortgage on all real and personal property, permits
the issuance of additional bonds based upon a calculation of unencumbered net
real and personal property. At December 31, 1994, such calculation would
permit the issuance of approximately $26,000,000 of additional bonds.
OTHER
Environmental Matters The Company has several contamination sites in various
stages of assessment investigation, see "Contingencies" in the Notes. Due to
the rate relief granted the Company for environmental costs and insurance
settlement proceeds for environmental costs received by the Company which are
being held in escrow, the Company believes that any future contamination
assessment and remedial costs arising from any of these sites will not be
material to the Company's operating results or liquidity.
Postretirement Benefits As discussed more fully in the Notes, the Company
adopted Statement of Financial Accounting Standards (SFAS) No. 106, "Employers
Accounting for Postretirement Benefits Other Than Pensions" in the first
quarter of 1993. The Company's actuary estimated the cost for 1994 of
$194,000, of which the Company estimates it recovered approximately 53% from
its customers through rates. The estimated cost for 1995 is $203,000, of
which the Company estimates it will recover 89% from its customers through
rates. The Company is not funding these benefit costs and it has historically
accounted for such costs on the pay-as-you go (cash) method. The actual cash
outlay for such benefits for 1994 was $86,000.
Quarterly Earnings The Company's quarterly financial information as
summarized in the Notes under the caption "Quarterly Financial Data
(Unaudited)" reflects the influence of, among other things, seasonal weather
conditions, the timing of rate increases and the migration of winter residents
and tourists to central and southern Florida during the winter season.
INDEPENDENT AUDITORS' REPORT
To the Directors and Shareholders of
Florida Public Utilities Company:
We have audited the accompanying consolidated balance sheets and
statements of capitalization of Florida Public Utilities Company and
its wholly-owned subsidiary, Flo-Gas Corporation, as of December 31,
1994 and 1993, and the related consolidated statements of income,
common shareholders' equity and cash flows for each of the three years
in the period ended December 31, 1994. These financial statements are
the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Florida Public
Utilities Company and its wholly-owned subsidiary, Flo-Gas
Corporation, at December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the
period ended December 31, 1994 in conformity with generally accepted
accounting principles.
As discussed in the Notes to the consolidated financial statements,
the Company changed its method of accounting for income taxes and
postretirement benefits other than pensions effective January 1, 1993
to conform with Statements of Financial Accounting Standards No. 109
and No. 106, respectively.
DELOITTE & TOUCHE LLP
Certified Public Accountants
West Palm Beach, Florida
February 17, 1995
Item 8. Financial Statements and Supplementary Data
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
Years Ended December 31
1994 1993 1992
Revenues $62,400 $66,584 $67,049
Cost of fuel and taxes based
on revenues 39,237 43,973 44,923
Operating Margin 23,163 22,611 22,126
Operating Expenses:
Operations 10,480 10,113 9,814
Maintenance 2,193 2,104 2,004
Depreciation and amortization 3,672 3,533 3,343
Taxes other than income taxes 1,528 1,514 1,438
Income taxes 943 867 1,037
Total operating expenses 18,816 18,131 17,636
Operating Income 4,347 4,480 4,490
Interest Charges and Other
Long-term debt 2,268 2,348 2,085
Short-term borrowings 146 61 249
Customer deposits and other interest 255 279 276
Other-net (39) 41 37
Total interest charges and other 2,630 2,729 2,647
Net Income 1,717 1,751 1,843
Preferred Stock Dividends 29 29 29
Earnings for Common Stock $ 1,688 $ 1,722 $ 1,814
Earnings Per Common Share $ 1.18 $ 1.22 $ 1.47
Dividends Per Common Share 1.16 1.12 1.08
Weighted Average Common
Shares Outstanding 1,435,280 1,416,476 1,232,380
See Notes to Financial Statements.
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
ASSETS 1994 1993
Utility Plant
Electric $40,826 $39,084
Natural gas 39,846 37,916
Water and propane gas 12,941 12,533
Common 1,787 1,429
Total 95,400 90,962
Less accumulated depreciation 31,687 29,395
Net utility plant 63,713 61,567
Current Assets
Cash and overnight investments 848 846
Overnight investments held in escrow for
environmental costs 1,992
Accounts receivable 6,102 6,838
Less allowance for uncollectible accounts (85) (151)
Inventories (at average or unit cost) 2,131 2,105
Prepayments and deferrals 832 760
Total current assets 11,820 10,398
Deferred Income Taxes and Regulatory Asset 5,700 4,874
Deferred Charges 1,048 1,196
Total $82,281 $78,035
CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholders' equity $22,334 $21,961
Preferred stock 600 600
Long-term debt 23,500 24,173
Total capitalization 46,434 46,734
Current Liabilities
Current maturities of long-term debt 673 28
Notes payable 4,000 4,000
Accounts payable 3,918 4,567
Dividends declared 425 405
Taxes accrued 114 253
Interest accrued 538 550
Tax collections payable 522 551
Insurance accrued 1,081 711
Other 537 584
Customer deposits 3,502 3,325
Total current liabilities 15,310 14,974
Deferred Credits
Customer advances for construction 1,128 1,300
Unamortized investment tax credits 1,703 1,812
Environmental insurance proceeds 3,185
Over recovery of fuel costs 1,267 175
Total deferred credits 7,283 3,287
Deferred Income Taxes and
Regulatory Liability 13,254 13,040
Commitments and Contingencies
Total $82,281 $78,035
See Notes to Financial Statements.
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(dollars in thousands)
December 31,
1994 1993
Common Shareholders' Equity
Common stock, $1.50 par value, authorized
2,000,000 shares; issued 1,567,119 shares
in 1994; issued 1,552,189 shares in 1993 $ 2,351 $ 2,329
Paid-in capital 10,597 10,309
Retained earnings 11,469 11,445
Treasury stock - at cost (121,860 shares 1994;
127,322 shares 1993) (2,083) (2,122)
Total common shareholders' equity 22,334 21,961
Preferred Stock
4 3/4% Series A, $100 par value, redemption
price $106.00, authorized and outstanding
6,000 shares 600 600
Long-Term Debt
First mortgage bonds (less current maturities)
Series
9.57% due 2018 10,000 10,000
10.03% due 2018 5,500 5,500
9.08% due 2022 8,000 8,000
4.75% due 1995 673
Total long-term debt 23,500 24,173
Total Capitalization $46,434 $46,734
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
(dollars in thousands)
Common Stock
Aggregate Paid-in Retained Treasury Stock
Shares Par Value Capital Earnings Shares Cost
Balance,
December 31,1991 1,242,363 $ 1,864 $4,631 $10,851 137,636 $(2,195)
Net income 1,843
Dividends (1,385)
Stock plans 10,388 16 248 (5,215) 37
Public offering 287,500 431 5,142
Balance,
December 31,1992 1,540,251 2,311 10,021 11,309 132,421 (2,158)
Net income 1,751
Dividends (1,615)
Stock plans 11,938 18 288 (5,099) 36
Balance,
December 31,1993 1,552,189 2,329 10,309 11,445 127,322 (2,122)
Net income 1,717
Dividends (1,693)
Stock plans 14,930 22 288 (5,462) 39
Balance,
December 31,1994 1,567,119 $2,351 $10,597 $11,469 121,860 $(2,083)
See Notes to Financial Statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND OVERNIGHT INVESTMENTS
(in thousands)
Years Ended December 31,
1994 1993 1992
Cash Flows from Operating Activities
Net income $1,717 $ 1,751 $ 1,843
Adjustments to reconcile net income to
net cash from operating activities
Depreciation 3,673 3,533 3,343
Doubtful accounts 91 139 152
Deferred income taxes (611) 378 87
Investment tax credits (109) (107) (108)
Other 83 37 49
Changes in operating assets and
liabilities
Accounts receivable 579 (615) 287
Inventories and prepayments (97) 59 (175)
Accounts payable and accrued
expenses (329) (289) 715
Environmental insurance proceeds 3,185
Over/(under) recovery of fuel
costs 1,092 6 (360)
Other 182 (51) (112)
Net cash provided by operating
activities 9,456 4,841 5,721
Cash Flows from Investing Activities
Construction expenditures (5,938) (5,379) (5,694)
Customer advances for construction (172) (158) (461)
Net cash used by investing
activities (6,110) (5,537) (6,155)
Cash Flows from Financing Activities
Short-term borrowings 4,750 4,000 300
Repayments of long-term debt (28) (2,354) (51)
Proceeds from sale of common stock
Stock plans 349 341 301
Public offering 5,573
Dividends paid (1,673) (1,596 (1,281)
Proceeds from long-term borrowing 7,879
Repayments of short-term borrowings (4,750) (12,300)
Net cash provided (used) by
financing activities (1,352) 391 421
Net Increase (Decrease) in Cash and
Overnight Investments 1,994 (305) (13)
Cash and Overnight Investments
at Beginning of Year 846 1,151 1,164
Cash and Overnight Investments
at End of Year $2,840 $ 846 $ 1,151
Supplemental Cash Flow Information
Cash was paid during the years as follows:
Interest $2,403 $ 2,646 $ 2,464
Income Taxes 1,779 698 1,390
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
Summary of Significant Accounting and Reporting Policies
Business and Regulation Florida Public Utilities Company (the Company) is an
operating public utility engaged principally in the purchase, transmission,
distribution and sale of electricity and in the purchase, transmission,
distribution, sale and transportation of natural gas. The Company is subject to
the jurisdiction of the Florida Public Service Commission (FPSC) with respect to
its electric, natural gas and water operations. The suppliers of electrical
power to the Marianna Division and of natural gas to the natural gas
divisions are subject to the jurisdiction of the Federal Energy Regulatory
Commission (FERC).
The Fernandina Beach Division is supplied most of its electrical power by a
municipality which is exempt from FERC and FPSC regulation. The Company also
distributes propane gas through a non-regulated subsidiary. The Company's
accounting policies and practices conform to generally accepted accounting
principles as applied to regulated public utilities and are in accordance
with the accounting requirements and rate making practices of the FPSC.
The Company prepares its financial statements in accordance with the
provisions of Statement of Financial Accounting Standards No. 71 -
"Accounting for the Effects of Certain Types of Regulation" (SFAS 71). In
general, SFAS 71 recognizes that accounting for rate regulated enterprises
should reflect the relationship of costs and revenues introduced by rate
regulation. As a result, a regulated utility may defer recognition of a cost
(a regulatory asset) or recognize an obligation (a regulatory liability) if
it is probable that, through the rate making process, there will be a
corresponding increase or decrease in revenues.
Accordingly, the Company has deferred certain costs, some of which are
material and some of which are not, which are being amortized over various
periods. Such costs relate to deferred income taxes, employees'
postretirement benefits other than pensions, unamortized debt issuance and
redemption expense, and unamortized rate case expense. The Company believes
that the FPSC will continue to allow the Company to recover its regulatory
assets.
Revenues The Company records utility revenues as service is provided and
bills its customers monthly on a cycle billing basis. Accordingly, at the
end of each month, the Company accrues for estimated unbilled revenues.
The rates of the Company include base revenues, fuel adjustment charges and the
pass through of certain governmental imposed taxes based on revenues. The base
revenues are determined by the FPSC and remain constant until a request for an
increase in such rates is filed and approved by the FPSC. From the FPSC
perspective, the Company operates four distinct "entities", i.e., Marianna
electric, Fernandina Beach electric, Fernandina Beach water, and natural gas,
consisting of Palm Beach County, Sanford and DeLand. Thus, for the Company to
recover through rate relief the effects of inflation for all such "entities", a
request for an increase in base revenues would require the filing of four
separate rate cases. At the present time, the Company does not have the
resources to file more than one rate case per year. However, the FPSC allows
for an annual automatic rate increase for water operations through the use of
a price index. Fuel adjustment charges are estimated for customer billing
purposes and any under/over recovery difference between the incurred cost of
fuel and estimated amounts billed to customers is deferred for future
recovery or refund and either charged or credited to customers. Interest
accrues on such under/over-recoveries and is included in the subsequent
adjustment.
Consolidation The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Flo-Gas Corporation. All significant
intercompany balances and transactions have been eliminated.
Certain reclassifications have been made to the prior years' financial
statements and other financial information contained herein to conform with
the 1994 presentation.
Utility Plant and Depreciation Utility plant is stated at original cost. The
costs of additions to utility plant include contracted services, direct labor,
materials and allowances for borrowed and equity funds used during
construction.The costs of units of property retired are removed from utility
plant, and such costs plus removal costs, less salvage, are charged to
accumulated depreciation. Maintenance and repairs of property and replacement
and renewal of items determined to be less than units of property are charged
to operating expenses. Substantially all of the utility plant and the shares
of Flo-Gas Corporation collateralize the Company's First Mortgage Bonds.
Depreciation is computed using the composite straight-line method at rates
prescribed by the FPSC for financial accounting purposes. Such rates are
based on estimated service lives of the various classes of property.
Depreciation provisions on average depreciable property approximates 4.0% per
year.
Income Taxes As of January 1, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes", which
requires a change from the deferred method to the liability method of
accounting for income taxes. Under the liability method, the tax effect of
temporary differences between the financial statement and tax basis of assets
and liabilities is reported as deferred taxes measured at currently enacted
rates. In accordance with SFAS No. 109, an increase in the net accumulated
deferred income tax liability and a corresponding regulatory asset was
recognized on the accompanying consolidated balance sheets to give effect to
temporary differences for which deferred taxes were not previously required
to be provided under APB No. 11. Adoption of this standard had no effect on
results of operations. In fiscal 1992, deferred income taxes result from
timing differences in the recognition of revenues and expenses for financial
statement and income tax reporting purposes, in accordance with Accounting
Principles Board Opinion (APB) No. 11, "Accounting for Income Taxes".
The Company provides for deferred income taxes on substantially all temporary
differences that give rise to the deferred tax assets and liabilities.
Investment tax credits have been deferred and are amortized based upon the
average useful life of the related property.
Deferred Charges Deferred charges consist principally of unamortized debt
issuance expense and early extinguishment premium. Such expenses are being
amortized over the lives of the issues to which they pertain.
Notes Payable
The Company has a line of credit agreement with its primary bank providing for a
$15,000,000 loan with interest at LIBOR plus 1/2%. At December 31, 1994
there was a balance outstanding of $4,000,000. The weighted-average
interest rates at December 31, 1994 and 1993 were 6.6% and 4.0%, respectively.
Capitalization
Common Shares Reserved The Company has reserved 45,731 common shares for
issuance under the Dividend Reinvestment Plan and 16,992 common shares for
issuance under the Employee Stock Purchase Plan.
Financing Transactions During 1992, the Company completed two financing
transactions. In June, the Company completed an $8,000,000 private placement of
First Mortgage Bonds, 9.08% series due 2022. The proceeds were used to repay
$8,000,000 of the $10,300,000 short-term debt outstanding. In July, the Company
completed the sale of its common stock offering of 287,500 shares at $20.875 per
share. The net proceeds, before deduction of expenses of approximately $69,000,
were $5,642,000. The proceeds were used to repay the remaining $2,300,000
short-term debt outstanding and the balance was used for utility plant
construction.
Dividend Restriction The Indenture of Mortgage and Deed of Trust and
supplements thereto provide for restriction of the payment of cash dividends.
At December 31, 1994 approximately $2,800,000 of retained earnings were free
of such restriction.
Maturities of Long-Term Debt Sinking fund payments are scheduled to begin in
2008.
Rate Matters
On September 23, 1994, the Company filed a request with the FPSC for an
increase in annual natural gas revenues of $2,079,000 and requested that the
interim rates be put into effect pending final action on the permanent
increase. In December 1994, the FPSC granted an interim rate increase of
$387,000. The final order granting a permanent increase is expected in June
1995. The principal reasons for the requested increase in base rates results
from increased operating and plant replacement costs, a deteriorated return
on the Company's investment and an aggressive marketing plan to attract new
customers.
On September 1, 1993, the Company filed a request with the FPSC for an
increase of $858,000 in annual electric revenues in the Marianna Division and
requested that the interim rates be put into effect pending final action on
the permanent increase. In November 1993, the FPSC granted an interim rate
increase of $137,000 that was effective November 18, 1993. On January 18,
1994, the FPSC authorized a permanent increase of $515,000 that became
effective February 17, 1994. The principal reason for the final increase
being lower than the Company's request was that the FPSC authorized the use
of a lower return on common equity capital and approved smaller increases in
storm reserve and tree trimming expenses than the Company had requested.
Following FPSC rules for water utilities, the Company in mid-1994 filed for
and was granted a price index revenue increase in the Fernandina Beach water
division. This increase, approximating $18,000 on an annual basis, was placed
into effect on June 4, 1994. A similar price index filing is planned for 1995.
Segment Information
The Company operates distribution systems providing natural and propane gas
service in three locations in central and southern Florida, electric service
in two locations in northern Florida and water service in one location in
northern Florida. There are no material intersegment sales or transfers.
Operating profit consists of revenues less operating expenses and does not
include other income, interest income, interest expense and income taxes.
Identifiable assets are those assets used in the Company's operations in each
business segment. Corporate assets are principally cash and overnight
investments, deferred tax assets and common plant.
Business segment information for 1994, 1993 and 1992 is summarized as follows
(in thousands):
1994 Gas Electric Water Common Consolidated
Revenues $24,814 $36,070 $1,516 $ $62,400
Operating profit 1,966 2,946 378 5,290
General corporate expenses 2,606
Income before income taxes 2,684
Identifiable assets 34,854 31,189 4,721 11,517 82,281
Depreciation 1,893 1,449 190 141 3,673
Construction expenditures2,992 2,400 195 351 5,938
1993
Revenues 26,773 38,307 1,504 66,584
Operating profit 2,245 2,750 352 5,347
General corporate expenses 2,755
Income before income taxes 2,592
Identifiable assets 34,275 30,512 4,696 8,552 78,035
Depreciation 1,823 1,390 184 136 3,533
Construction expenditures2,624 2,519 89 147 5,379
1992
Revenues 29,498 36,174 1,377 67,049
Operating profit 2,955 2,280 292 5,527
General corporate expenses 2,656
Income before income taxes 2,871
Identifiable assets 33,046 29,452 4,771 3,926 71,195
Depreciation 1,743 1,290 178 132 3,343
Construction expenditures2,508 2,788 311 87 5,694
Income Taxes
The provision (credit) for income taxes consists of the following (in
thousands):
1994 1993 1992
Current
Federal $ 1,471 $ 523 $ 895
State 192 73 163
1,663 596 1,058
Deferred
Federal (574) 307 71
State (37) 71 16
(611) 378 87
Investment tax
credits (109) (107) (108)
Total $ 943 $ 867 $1,037
The difference between the effective income tax rate and the statutory
federal income tax rate applied to pretax income is accounted for as
follows (in thousands):
1994 1993 1992
Federal income tax at
statutory rate $ 912 $ 881 $ 976
Effect of state income
taxes 155 144 179
Investment tax credit (109) (107) (108)
Other (15) (51) (10)
Provision for income taxes $ 943 $ 867 $1,037
The tax effects of temporary differences producing accumulated deferred income
tax assets and liabilities in accordance with SFAS No. 109 as reflected in the
accompanying consolidated balance sheets are as follows (in thousands):
Deferred tax assets 1994 1993
Regulatory asset $ 3,546 $ 4,260
Alternative minimum tax credit 656 320
Other 1,498 294
Total deferred tax assets $ 5,700 $ 4,874
Deferred tax liabilities
Utility plant related (Note) $12,778 $12,552
Other 476 488
Total deferred tax
liabilities $13,254 $13,040
Note: Includes regulatory liabilities of $3,012 and $2,964,
respectively.
The provision (credit) for 1992 deferred income taxes, under APB
No. 11, consists of the following (in thousands):
Accelerated depreciation $ 437
Contributions in aid
of construction (234)
Purchased energy (142)
Alternative minimum tax 69
Other (43)
Total $ 87
Employee Benefit Plans
Pension Plan The Company has a noncontributory defined benefit pension plan
covering substantially all its employees. The benefits are based on the
employee's credited service and average compensation, generally during the last
five years before retirement. The Company's policy is to fund pension costs in
accordance with contribution guidelines established by The Employee Retirement
Income Security Act of 1974.
The components of net pension income
are as follows (in thousands):
1994 1993 1992
Service cost $ 473 $ 445 $ 401
Interest cost 791 728 686
Actual return on assets (230) (2,791) (1,888)
Net amortization and deferral (1,184) 1,519 758
Net periodic pension income $ (150) $ (99) $ (43)
Actuarial assumptions:
Discount rate 7% 7% 7%
Rate of increase in future
compensation levels 5.5% 5.5% 5.5%
Expected long-term rate of
return on assets 8% 8% 8%
The Plan's funded status of the plan at December 31, 1994 and 1993, is as
follows (in thousands)
1994 1993
Actuarial present value of benefit
obligations:
Vested benefit obligation $ (9,098) $ (8,534)
Accumulated benefit obligation $ (9,602) $ (9,158)
Projected benefit obligation $(12,206) $(11,495)
Plan assets at fair value 18,060 19,052
Plan assets in excess of projected
benefit obligation 5,854 7,557
Unrecognized net gain (4,836) (6,581)
Unrecognized prior service cost 699 774
Unrecognized net asset at
January 1,1986 being recognized
over 15 years (1,100) (1,283)
Prepaid pension cos t $ 617 $ 467
Health Plan The Company is principally self-insured for its employee and
retiree medical insurance plan. The Company's health care liability under
the plan is limited to $60,000 per individual per year, with a maximum total
liability currently approximating $1,000,000.
A reserve for future benefit payments for active employees is maintained at a
level sufficient to provide for estimated outstanding claims under the plan
net of amounts contributed by employees. Net health care benefits paid by
the Company for active employees were approximately $622,000, $548,000 and
$294,000 for 1994, 1993 and 1992, respectively.
Other Postretirement Benefits As of January 1, 1993, the Company adopted
SFAS No. 106, "Employers Accounting for Postretirement Benefits 0ther Than
Pensions". The Statement requires accrual of postretirement benefits during
the years an employee provides service. The Company provides postretirement
health care benefits for certain retired employees and their eligible
dependents and reduced postretirement life insurance benefits for retired
employees. The accumulated health care postretirement benefit obligation
(transition obligation) under SFAS No. 106 is being amortized over 20 years
beginning 1993. The Company estimates that it recovered approximately 53%
from its customers through rates in 1994 and expects to recover about 89% in
1995. The Company is not accruing for reduced postretirement life insurance
benefits as the cost to the Company is offset by employee contributions.
The components of postretirement benefit costs are as follows (in thousands):
1994 1993
Service Cost $ 65 $ 46
Interest cost 80 58
Amortization of transition obligation 43 43
Return on plan assets 0 0
Net amortization and deferral 6 -
Periodic postretirement benefit cost $194 $147
The Plan's funded status at December 31, 1994 and 1993, is as follows (in
thousands):
1994 1993
Accumulated postretirement benefit
obligation (APBO):
Retirees $(448) $(331)
Fully eligible active plan
participants (48) (42)
Other active plan participants (761) (523)
Total APBO (1,257) (896)
Plan assets 0 0
APBO less than plan assets (1,257) (896)
Unamortized transition obligation 772 815
Unrecognized (gain) loss 236 (39)
Unrecognized prior service cost 0 0
Accrued post benefit obligation $(249) $(120)
The measurement of the APBO assumes a 7% discount rate in 1994 and 1993 and a
health care cost trend rate of 10.4% in 1995 decreasing to 5.5% by the year 2007
and beyond. A one-percentage point increase in the assumed health care cost
trend rate would increase the APBO by approximately 15% and the periodic cost
by about 13%.
Employee Stock Purchase Plan The Company's Employee Stock Purchase Plan offers
common stock at a discount to qualified employees. During 1994, 1993 and 1992,
5,062, 5,099 and 5,215 shares, respectively, were issued under the Plan for
aggregate consideration of $81,000, $93,000 and $94,000, respectively.
Contingencies
The Company is subject to federal and state legislation with respect to soil,
groundwater and employee health and safety matters and to environmental
regulations issued by the Florida Department of Environmental Protection (FDEP),
the United States Environmental Protection Agency and other federal and state
agencies. Except as discussed below, the Company does not expect to incur
material future expenditures for compliance with existing environmental laws and
regulations.
West Palm Beach Site The Company is currently conducting a contamination
assessment investigation of a parcel of property owned by it in West Palm Beach,
Florida. After a preliminary contamination assessment investigation indicated
soil and groundwater impacts, the Company entered into a consent order with the
FDEP. The consent order requires the Company to delineate the extent of soil
and groundwater impacts associated with the prior operation of a gasification
plant on the property and requires the Company to remediate any soil and
groundwater impacts, if necessary. In June 1992, the FDEP approved the
Company's proposed contamination assessment plan and the Company commenced
the contamination assessment investigation. Following FDEP approval of a
revised scope of work, additional contamination assessment activities were
initiated in January 1995.
Since the contamination assessment investigation has not yet been completed,
it is not possible to determine the complete extent or cost of remedial
action, if any, which may be required. However, preliminary estimates from
the Company's environmental consultant suggest that total contamination
assessment and remedial costs for this site may reach approximately
$3,250,000. Until the contamination assessment investigation is completed,
it is not possible at this time to determine when and how much of such costs
the Company will have to pay. A portion of the on-site impacts on the site
have been determined to be eligible for reimbursement from state fund and the
FDEP has determined that a portion of the work conducted off-site is eligible
for reimbursement under state law. Due to the rate relief granted to the
Company for environmental costs and insurance settlement proceeds for
environmental costs received by the Company which are being held in escrow,
as well as the potential for reimbursement from the state for a portion of
the assessment and remediation, the Company believes that it will not incur
material future expenditures to achieve compliance for this site with
existing environmental laws and regulations.
Sanford Site The Company owns a parcel of property located in Sanford, Florida.
Prior to the Company's acquisition of this property, it had been the site of a
gasification plant. The FDEP issued a Warning Notice to the Company which
required the Company to conduct a contamination assessment investigation of the
property. A preliminary investigation revealed that soil was impacted
throughout the center of the property.
In 1992, the Company brought suit in federal court in Orlando against former
owners and operators of the gasification plant to seek recovery of the Company's
compliance costs at this property. The Company has entered into a cost sharing
agreement with four former owners/operators of the gasification plant. Under
this agreement, the parties agreed to share equally in the cost of the
contamination assessment investigation of the property. The Company
dismissed the cost recovery action in February 1995.
The initial contamination assessment investigation was completed and a
Contamination Assessment Report (CAR) was delivered to FDEP on February 4,
1994. Until completion of FDEP's review of the CAR, it is not possible to
determine the complete extent or cost of remedial action, if any, which may
be required. However, preliminary estimates from the Company's environmental
consultant suggest that total contamination assessment and remedial costs for
the site may reach approximately $2,750,000. Pending completion of the
FDEP's review of the report, it is not possible to determine when and how
much of such costs the Company will have to pay. Due to the rate relief
granted to the Company for environmental costs and insurance settlement
proceeds for environmental costs received by the Company which are being held
in escrow, as well as the potential for recovery of a portion of the
assessment and remediation costs from several former owners/operators of the
gasification plant, the Company believes that it will not incur material
future expenditures to achieve compliance for this site with existing
environmental laws and regulations.
Pensacola Site The FDEP notified the Company and other alleged responsible
parties to conduct additional soil and groundwater sampling to determine the
extent of soil and groundwater impacts at a property previously the site of a
gasification plant in Pensacola, Florida. The Company was a former
owner/operator of the gasification plant for several years. The Company and
other alleged responsible parties have agreed to share equally the costs of
such an investigation.
A contamination assessment report (CAR) describing the results of the
contamination assessment investigations was delivered to FDEP in January 1994.
With the exception of security fencing, the CAR recommended no further action at
this site. After its review of the CAR in November 1994, the FDEP notified the
Company and other alleged responsible parties that additional soil and
groundwater sampling was necessary at this site. Until completion of such
additional investigation, it is not possible to determine the complete extent
of remedial action, if any, which may be required. However, preliminary
estimates from the Company's environmental consultant suggest that total
contamination assessment and remedial costs for this site may reach
approximately $1,400,000. Until the contamination assessment investigation
is completed, it is not possible to determine when and how much of such costs
the Company will have to pay. Due to the rate relief granted to the Company
for environmental costs and insurance settlement proceeds for environmental
costs received by the Company which are being held in escrow, as well as the
potential for recovery of a portion of the assessment and remediation costs
from several current and former owners/operators of the site, the Company
believes that it will not incur material future expenditures to achieve
compliance for this site with existing environmental laws and regulations.
Georgia Transformer Site In October 1994, the Environmental Protection Agency
(EPA) issued a Notice of Potential Liability to the Company in which the EPA
identified the Company as a potentially responsible party (PRP) in connection
with a site in Georgia where the Company was alleged to have sent
transformers for repair. In the notice, the EPA demanded that PRPs for the
site reimburse the EPA for response costs that it had incurred through August
1994 in connection with soil remediation efforts.
The Company, along with the PRPs, has entered into settlement negotiations with
the EPA. Until negotiations with the EPA are completed, it is not possible to
determine the Company's share of the response costs incurred by the EPA through
August 1994. Since the EPA and the State of Georgia are currently evaluating
whether additional contamination assessment and remedial action may be
required at this site, it is not possible to determine the nature and extent
of soil or groundwater impacts on the site, nor is it possible to determine
the extent or cost of additional remedial action which may be required.
Based on the Company's volumetric share of materials sent to the site, the
Company believes that it will not incur significant future expenditures to
satisfy its obligations at this site.
Insurance Claims and Rate Relief The Company notified its insurance carriers of
environmental impacts detected at each of the former manufactured gas plant
(MGP) sites discussed above.
As a result of negotiations with the Company's major insurance carriers that
concluded in November 1994, such carriers agreed to pay settlement proceeds
totaling approximately $4,000,000 for certain environmental costs, to be paid to
the Company over a period of time ending in December 1995. In addition, the
Florida Public Service Commission has allowed the Company to recover through
rate relief environmental expenses of approximately $2,400,000 over a
ten-year period at the rate of approximately $240,000 per year.
Due to the rate relief granted the Company for environmental costs and insurance
settlement proceeds for environmental costs received by the Company which are
being held in escrow, the Company believes that any future contamination
assessment and remedial costs arising from any of these sites will not be
material to the Company's operating results or liquidity.
Quarterly Financial Data (Unaudited)
The quarterly financial data presented below reflects the influence of, among
other things, seasonal weather conditions, the timing of rate increases and the
migration of winter residents and tourists to central and southern Florida
during the winter season. (in thousands, except per share amounts).
FIRST SECOND THIRD FOURTH
1994 QUARTER QUARTER QUARTER QUARTER
Revenues $17,900 $15,085 $15,571 $13,844
Operating margin 6,471 5,496 5,244 5,952
Operating profit 2,074 1,047 789 1,380
Net income 937 258 103 419
Earnings per
share (Note) .65 .18 .07 .29
1993
Revenues 17,085 16,439 16,923 16,137
Operating margin 6,147 5,447 5,156 5,861
Operating profit 1,873 1,086 989 1,399
Net income 771 241 247 492
Earnings per share .54 .17 .17 .34
Note: The sum of the quarterly earnings per share amounts does not
equal the annual earnings per share amount reflected in the
consolidated statement of income due to the effect of changes
in average common shares outstanding during the fiscal year.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information concerning directors and nominees of the Registrant is
included under the caption "Nominees and Continuing Directors" in the
Registrant's Proxy Statement for the 1993 Annual Meeting of Shareholders
and is incorporated by reference herein.
The following table sets forth certain information about the executive
officers of the Registrant.
Name Age Position Date
R. L. Terry 75 Chairman of the Executive
Committee 1985 - Present
F. C. Cressman 61 President 1985 - Present
Chief Executive Officer 1991 - Present
John T. English 51 Senior Vice President 1993 - Present
Charles L. Stein 45 Vice President 1993 - Present
Darryl L. Troy 53 Vice President 1993 - Present
M. K. Hall 70 Corporate Secretary 1976 - Present
Jack Brown 60 Treasurer 1988 - Present
Mr. English was Vice President for two years preceding his appointment as
Senior Vice President and was Division Manager of the Fernandina Beach
Division for more than two years preceding his appointment as Vice
President.
Mr. Stein was Manager of Gas Operations for more than four years
preceding his appointment as Vice President.
Mr. Troy was Assistant Secretary and Assistant Treasurer for more than four
years preceding his appointment as Vice President.
There are no family relationships between the executive officers.
All executive officers are elected for a one year term.
Item 11. Executive Compensation
Information concerning executive compensation is included under the
caption "Executive Compensation" in the Registrant's Proxy Statement and
is incorporated by reference herein.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information concerning the security ownership of certain of the
Registrant's beneficial owners and management is included under the
captions "Security Ownership of Certain Beneficial Owners" and "Nominees
and Continuing Directors" in the Registrant's Proxy Statement and is
incorporated by reference herein.
Item 13. Certain Relationships and Related Transactions
Information concerning certain relationships and related transactions is
included under the caption "Transactions with Management" in the Registrant's
Proxy Statement and is incorporated by reference herein.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. Financial Statements
Independent Auditors' Report
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Capitalization
Consolidated Statements of Common Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Financial Statements
2. Financial Statement Schedules
All schedules are omitted because of the absence of the
conditions under which they are required or because the
required information is included in the financial statements
and related notes thereto.
3. Exhibits
See Exhibit Index on page following signatures page.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
December 31, 1994.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FLORIDA PUBLIC UTILITIES COMPANY
(Registrant)
By /s/ Jack Brown
Jack Brown
(Principal Financial and Accounting Officer)
Date March 21, 1995
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the date
indicated.
/s/ Robert L. Terry Date: March 21, 1995
Robert L. Terry
Chairman of the Executive Committee and Director
/s/ Franklin C. Cressman Date: March 21, 1995
Franklin C. Cressman
President and Chief Executive Officer and Director
/s/ Constant A. Benoit, Jr. Date: March 21, 1995
Constant A. Benoit, Jr.
Director
/s/ E. James Carr, Jr. Date: March 21, 1995
E. James Carr, Jr.
Director
/s/ Daniel Downey Date: March 21, 1995
Daniel Downey
Director
/s/ John T. English Date: March 21, 1995
John T. English
Senior Vice President and Director
/s/ Gordon O. Jerauld Date: March 21, 1995
Gordon O. Jerauld
Director
EXHIBIT INDEX
(a) Exhibits
Regulation S-K
Item Number 21. Subsidiary of the registrant
23. Independent auditors' consent
27. Financial data schedule
EXHIBIT 21
Subsidiary of the registrant
Name Jurisdiction of Incorporation
Flo-Gas Corporation Florida
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Post-Effective Amendment
No. 16 to Registration Statement No. 2-24986 of Florida Public Utilities
Company on Form S-8 of our report dated February 17, 1995, appearing in
this Annual Report on Form 10-K of Florida Public Utilities Company for the
year ended December 31, 1994.
DELOITTE & TOUCHE LLP
Certified Public Accountants
West Palm Beach, Florida
March 21, 1995
EXHIBIT 27
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 63713
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 11820
<TOTAL-DEFERRED-CHARGES> 1048
<OTHER-ASSETS> 5700
<TOTAL-ASSETS> 82281
<COMMON> 2351
<CAPITAL-SURPLUS-PAID-IN> 10597
<RETAINED-EARNINGS> 11469
<TOTAL-COMMON-STOCKHOLDERS-EQ> 22334
0
600
<LONG-TERM-DEBT-NET> 23500
<SHORT-TERM-NOTES> 4000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 673
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 6757
<TOT-CAPITALIZATION-AND-LIAB> 82281
<GROSS-OPERATING-REVENUE> 62400
<INCOME-TAX-EXPENSE> 943
<OTHER-OPERATING-EXPENSES> 10480
<TOTAL-OPERATING-EXPENSES> 18816
<OPERATING-INCOME-LOSS> 4347
<OTHER-INCOME-NET> 39
<INCOME-BEFORE-INTEREST-EXPEN> 4386
<TOTAL-INTEREST-EXPENSE> 2669
<NET-INCOME> 1717
29
<EARNINGS-AVAILABLE-FOR-COMM> 1688
<COMMON-STOCK-DIVIDENDS> 1664
<TOTAL-INTEREST-ON-BONDS> 2268
<CASH-FLOW-OPERATIONS> 9456
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.18
</TABLE>
